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Issues involved: The primary issue in this case is whether the income earned by the respondent assessee should be taxed as short term capital gain or as income from business.
Details of the judgment: Issue 1: Taxation of income earned on sale of shares The respondent-assessee, a Doctor by profession, declared short capital gain in the return of income for the assessment year 2004-05. The Assessing Officer considered a portion of the gain as business income due to the short holding period of the shares. However, the CIT (A) and the Tribunal, relying on CBDT Circular No.4-2007, concluded that the gain on sale of shares should be taxed as short term capital gain. The Tribunal noted that the funds for investment in shares mostly belonged to the assessee, the shares were consistently shown as investments in the balance sheet, and the dividend income earned further supported the investment nature. Considering the respondent's busy schedule as a Doctor, the Tribunal determined that the income from the sale of shares held for less than six months should be taxed under the head of Capital Gain. It was also mentioned that for earlier assessment years, the revenue had taxed the gain on sale of shares as short term capital gain. Issue 2: Absence of legal question The Tribunal's decision to tax the gain from the sale of shares as capital gain was based on concurrent factual findings. Therefore, the High Court concluded that no legal question arose for consideration, and thus, the appeal was dismissed without costs.
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